Apple and Yahoo! have rolled out neighborhood-specific weather in their respective weather apps for iOS. This isn't just in iOS 7—where it was first noticed on reddit—but also for iOS 6 and iOS 5, and possibly others.
The change appears to have been pushed by Yahoo!, whose data powers Apple's default Weather.app for iOS as well as Yahoo!'s new Yahoo! Weather app.
The feature requires Location Services to be active for the specific app in question.
Location Services "On" for Weather and Yahoo! Weather
When you do so, you'll see your local weather. In the screenshot below, there's the default weather info for a city, San Jose in this case. On the right, we have Location Services turned on, and now local weather shows up as "Northlake," a neighborhood in San Jose.
Apple's Weather.app in iOS 6.x
Similarly, Yahoo!'s Weather app will give us neighborhood-specific data. In this particular example, all of the weather info is the same, but microclimates can often differ dramatically.
Yahoo! Weather App
Some of the microclimate data is named after the buildings where the data is collected, such as museums, hotels, banks, and office buildings.
Forecast.io, a browser-based weather service, has become quite popular in part because it offers neighborhood data.